Via The Financial Times, an interesting look at the blossoming relationship between India and Venezuela:

Venezuela’s gigantic oil reserves are coveted the world over – especially the Orinoco extra-heavy crude belt, which is one of the planet’s few remaining largely untapped reserves of hydrocarbons.

Investment conditions in Hugo Chávez’s Venezuela may not be ideal, but the sheer size of the reserves has attracted oil companies of all shapes and sizes, with the latest to express interest being India’s Reliance Industries.

In addition to an agreement to increase its oil purchases to between 300,000 to 400,000 barrel per day, on Tuesday PDVSA said Reliance also wants to partner up to develop one of the oil blocks in the Orinoco.

For Venezuela, this is part of a strategy to diversify oil exports away from the US, by far its biggest client, with China being the main beneficiary of this policy so far. It is also further recognition that PDVSA needs all the help it can find to get the Orinoco’s oil out of the ground.

Meanwhile, this comes as resource-scarce India attempts to expand and diversify its supply of oil, with three state-run companies bidding $5bn for stakes in Canadian oil sands holdings owned by ConocoPhillips, as the $2 trillion economy cuts imports from Iran, a major supplier, in order to dodge US sanctions.

But developing the Orinoco may prove trickier – or at least slower. A horde of foreign oil companies from other major countries like China, Russia, Japan and Italy have signed agreements with PDVSA in recent years, but so far they have little to show for it in terms of oil production.

There are a number of barriers to these projects getting off the ground, in particular the vast investments that will be required, 60 per cent of which should in theory come from PDVSA. The problem is that PDVSA has been co-opted by Chávez to fund his Bolivarian Revolution, leaving little left over to finance projects such as those in the Orinoco.

Things might get easier for foreign companies in the Orinoco if Chávez loses the elections – but if the latest polls are anything to go by, it doesn’t look like that is the most likely scenario.